THE SECURITIES and Exchange Commission (SEC) has eased requirements for companies seeking to increase their authorized capital stock, allowing them to use subscription contracts instead of costly and time-consuming audit reports.
In a statement on Thursday, SEC Chairperson Francisco Ed. Lim said the move is aimed at making corporate processes 鈥渟impler, easier, and more cost-efficient, enabling more corporations, especially micro, small, and medium enterprises, to grow and thrive.鈥
Under Memorandum Circular No. 6, Series of 2026, companies can now submit subscription contracts for cash-paid capital stock increases, replacing the previous requirement for a Special Audit Report (SAR) when paid-up capital exceeds P50 million. Subscription contracts are legal agreements specifying the number of shares subscribed to and how payment is made.
鈥淭he streamlined compliance process could reduce the financial burdens of companies that plan to increase their capitalization, supporting their expansion and contribution to economic growth,鈥 the SEC added.
The subscription contract must be signed by the subscriber and the company鈥檚 president and treasurer. If they are unavailable, a board resolution can authorize a director or officer to sign on their behalf.
Companies with public-interest obligations 鈥 including listed firms, those offering securities to the public, and holders of secondary SEC licenses 鈥 will still need to submit SARs for capital stock increases. 鈥 Alexandria Grace C. Magno
